Study: Hongkongers are comfortable buying online but are SMBs able to keep up?

Hongkongers used more digital payment as the government rolled out the consumption voucher scheme last year, while free delivery services and discounts were the major factors propelling them to go online to shop, according to research conducted by We Are Social and Hootsuite. 

A report from Visa Global Back to Business Study – 2022 SMB Outlook said that currently, 90% of Hong Kong consumers plan to shop across borders the same amount or more in 2022, compared to 81% globally. On average, 75% responded they are comfortable buying items or services from a business in another territory. Of those who are not completely comfortable, 58% cite protection typically offered by their credit or debit card issuer in case of fraudulent or if the product or service is not received, provides them with peace of mind.  The study added that 31 % Hong Kong consumers have opted not to buy something in a physical store because they weren't offered a way to pay for it digitally, and more than 2 in 3 (68%) consumers responded they expect to shift to being cashless within the next 10 years, including 10% who already are. The top benefits for relying more on digital payments were convenience (54% compared to 37% globally), easier to shop online (51%) and less physical contact (38%).  

Meanwhile, We are Social and Hootsuite's "The Digital 2022: Hong Kong" report said there were 6.46 million people who purchased consumer good via the Internet last year, with a year-on-year growth of 7.2%. The city spent US$20.56 million online to buy consumer goods in 2021 too, up from US$18.36 billion last year. 
Digital payment levels in Hong Kong increased significantly over the past 12 months to hit US$16 billion thanks to the government's consumption voucher scheme. The year-on-year change in the value of digital payment transaction increased by 32% or US$3.9 billion. Individuals in the city also made more purchases via digital payment. The average annual value of digital payments per user reached US$2,861 last year, equivalent to a year-on-year growth of 23%.
The report has also examined online shopping activities and found that 52.4% of respondents aged from 16 to 64 in Hong Kong purchased a product or service online in Hong Kong each week, while 32.5% said they used an online price comparison site weekly before in inform themselves too.
The report also studied factors that pushed Hongkongers to do online shopping. Free delivery services was the most common factor as 59.5% of respondents cited it as the biggest reason for them to do online purchase, followed by coupons and discounts (50.8%) and simple online checkout procedures (31.4%).
Lastly, Hongkongers spent many of their money on fashion, electronics and furniture. For example, they spent US$11.08 billion on fashion, up from US$9.58 in 2020, equivalent to a year-on-year increase of 15%. Electronics ranked second (US$2.78) and had a year-on-year change of 2.6%. Furniture was the third largest category with the amount reaching US$2.4 billion last year. It had a year-on-year increase of 2.8.%.
“Hong Kong remains, as ever, an intriguing market for brands trying to negotiate a marketing landscape populated by super digitally connected people who are occasionally reluctant to change some of their more analogue behaviours. But the success of the government’s mobile payment push is a great example of driving change and how powerful it can be if you know how to get it right," said Donald Wong, GM of We Are Social Hong Kong.

How are SMBs coping?

Meanwhile, a large part of Hong Kong's economy is currently run by SMBs. According to Visa Global Back to Business Study – 2022 SMB Outlook, 94% of surveyed Hong Kong SMBs are optimistic about the future of their businesses (compared to 90% globally), ranking second among all markets surveyed.

When it comes to payments, 95% of Hong Kong SMBs surveyed said they will accept contactless payment or some form of digital payment option in 2022 (higher than the global average of 82%), and over half (56%) of consumers surveyed expect to use digital payments more often in 2022, with just 2% saying they will use them less.  

“Payments are no longer just about simply completing a sale. It’s about creating a simple and secure experience that reflects one’s brand across channels and provides utility to both the business and its customer,” said Maaike Steinebach, general manager of Visa Hong Kong and Macau. “The digital capabilities that small businesses have built up during the pandemic – from contactless to e-commerce – helped them pivot and survive, and by continuing to build on this foundation, can now help them find new growth and thrive.”  

According to this year’s study, which surveyed small business owners and consumers in nine markets – Brazil, Canada, Germany, Hong Kong, Ireland, Russia, Singapore, United Arab Emirates and United States – the consensus outlook for 2022 is one of optimism and intent to digitise even more. Nearly 75% of Hong Kong SMBs expect to sell across borders more in 2022, even though a market-leading 77% report it as a challenge.

An overwhelming 92% of Hong Kong SMB respondents (compared to 84% globally) anticipate being able to shift to relying exclusively on digital payments within 10 years, including 7% that are cashless already. Of those surveyed who plan to accept some form of digital payment option in 2022, 34% said they plan to accept digital currencies such as Bitcoin. Around 97% of small businesses who have an online presence said they attributed pandemic survival to increasing their efforts to sell online, compared to 90% globally. However, an overwhelming majority (92% compared to 79% globally) felt some sort of pressure to compete online with newer and tech savvy competitors.  

(Photo courtesy: 123rf)